PART ONE: Interview With Michael Wyatt, CEO of Michael Wyatt Consulting ~ Real Property & Property Tax Advisory Firm in Corona, CA

California Property Tax Consultant

Residential Property Tax Consultant

Michael Wyatt’s very busy consulting and advisory firm in Corona, California, Michael Wyatt Consulting, works with attorneys, CPAs, financial planners, real estate brokers and their clients; who have real property and require assistance with a property tax issue. Mr. Wyatt believes that each and every client is unique, and comes to his firm with unique real property requirements. No one is a simple number on a list at Mr. Wyatt’s firm. All real estate services are designed to customize every client’s real estate needs and solutions, with decades of experience behind every analysis, insight & service.

For 25 years, Mr. Wyatt functioned successfully as a star appraiser for the Orange County Assessor’s Office – and was consistently given the most difficult commercial, retail, office, industrial, residential and apartment project appraisal assignments. As Operations Manager, Mr. Wyatt served as a senior Commercial & Residential Review Appraiser. Michael Wyatt provided valuation and legal assistance to the Assessor’s Office top management and staff on current Assessor Office guidelines and procedures, with respect to property tax laws, appraisal best practices and techniques.

Michael Wyatt Consulting annually reviews clients’ real estate values. The firm studies and forms strategy for proposed real estate transactions, along with ensuring property tax assessment avoidance. Mr. Wyatt conducts comprehensive real property research, reviews real estate deeds and other instruments for accuracy prior to recording; and serves as a liaison between clients and the Assessor’s Office – maintaining smooth, issue-free communications, coordination and cooperation with Assessors and other essential governmental agencies.


Part one of the interview with Michael Wyatt, a California Property Tax Consultant


Property Tax Transfer: Mr. Wyatt, thank you so much for speaking with us today.

Michael Wyatt: Very glad to be able to do it. 

Property Tax Transfer: Can you tell us how you view Proposition 58, and how you explain this unique property transfer tax break to new clients?  You must have to teach certain clients about what’s involved to keep parents property taxes, avoiding property tax reassessment and what they need to focus on in order to transfer parents property taxes to themselves when inheriting property, and what’s involved with California property tax transfer, and  inheriting property taxes…

Michael Wyatt: You let them know that the Proposition 58 tax benefit entitles children of parents leaving them property to preserve the low Proposition 13 maximum 2% tax base. A California property tax transfer.  However, a lot of people don’t fully understand that you have to apply for the benefit. It’s not automatic. And it doesn’t apply to the principal home.

 Property Tax Transfer: What about explaining restrictions on this tax break?

Michael Wyatt: You have to explain to them that they get the assessed value tax benefit only if it’s a non principal home. You get the assessed value waved if for example it‘s a million dollar property… You get the million excluded – but the overage is reassessed… A lot of people don’t know that. The creators of the trust get this benefit.

Property Tax Transfer: Exactly how do you define “children” of the parent leaving property?

Michael Wyatt: The definition of ‘a child’ or “children” is typically the adult children of a decedent…But this also refers to step-parents. Step-parents can also transfer property to a step-child… Mom is a step parent and can still get the benefit. In laws get the benefit as well. You don’t have to be blood relatives.

Property Tax Transfer:  Michael Wyatt Consulting frequently works with the popular trust lender Commercial Loan Corporation, providing clients with trust loans. Beside talking to them about the California property tax transfer, how do you describe California Proposition 58, and that whole process to prospects or clients, that are sort of inexperienced with all this?

Michael Wyatt: We basically introduce the trust lender, for example Commercial Loan Corporation, as a private money lender that loans to irrevocable trusts, that applies for and works in tandem with California Proposition 58… for beneficiaries who are looking to sell their real property shares – for the purpose of facilitating “non pro-rata distribution”… So every heir gets an equal share of the entire overall estate – however, not necessarily of every asset.

Property Tax Transfer: So what happens if beneficiaries go to a conventional lender, like Wells Fargo?  Where there is no trust loan loan, no loans to to irrevocable trusts; no  tax benefits associated with property tax transfer or parent to child transfer (commonly known as parent to child exclusion), so on and so forth.  

Michael Wyatt: If there is a family that goes to a conventional, pricey lender like Wells Fargo for instance – they will always require adult children, beneficiaries that want to sell an inherited property, to ‘go off-title’, and that always triggers present-day tax reassessment. And that spells an expensive 66.66% tax hike!

Property Tax Transfer: Yes. Going “off-title”, taking your name off the title, always shifts you into a very expensive scenario. And if you use the Commercial Loan Corp. trust loan?

Michael Wyatt: Well, if the family in question uses the Commercial Loan Corp, cLoanC.com, a company we have been using for years… the loan they provide is to a trust, and not to beneficiaries; so there is no title, and no crippling 66.66% property tax reassessment. 

Property Tax Transfer:  Got it.  Can you give us an example, sir?

Michael Wyatt:  Well, for example, there might be three siblings… beneficiaries – and a house to inherit.  And this is always important to remember.  If you’re one out of the three siblings that wants to keep the inherited house,  you are definitely  looking at a 66.66% property value tax reassessment – if you’re operating without a loan to a trust, or you’re using your own cash; or getting money from a  very pricey institutional lender – typically with multiple restrictions and extremely strict terms. 

> Click Here to Continue to Part Two of the  Interview…

Michael Wyatt can be contacted at (951) 264-6152 for question  on retaining a parents low property tax base. You can reach the Commercial Loan Corporation at (877) 464-1066; or simply go to https://cloanc.com with questions on a loan to a trust, irrevocable trust, or a property in probate plus numerous other related issues.

Part Two: Why are Proposition 13 & Prop 58 Critical to Californians?

Before Proposition 13 was passed by voters on June 6, 1978, average tax rates in California were close to 3% of market value, without any guardrails as far as property tax or property value assessments were concerned.  This is why Prop 13 & Prop 58 are critical to Californians.

In fact, right before Proposition 13 was passed, things has gotten so bad that there were homes being reassessed by fifty percent… to a hundred percent from one year to the next, literally within a 12-month time-frame. Home owners’ tax liabilities were going through the roof! So much so, that many middle and even upper middle class property owners were actually unable to pay the tax hit on their home consistently every year.

Folks who resided in California at that time, and still live in California to this day, tell us that you could see the anxiety and fear etched into the faces of property owners all across the state. There was no predictability, regarding property taxes, from year to year. People never knew what increases would be eating into them from year to year.

There was a point, before 1978, when these tax-increase issues were so severe and problematic, that over 400,000 home owners in LA County were actually not able to pay their property taxes due to particularly egregious tax increases. With many people coming very close to losing their homes, and some literally losing their primary residence where they have lived for years; many for decades, such as elderly Californians, who were particularly badly affected.

Many seniors were free of mortgage debt, and yet were forced out of their home because they couldn’t afford to pay their property tax… and many became literally sick with anxiety and worry over the fear of losing their home.

Millions of Californians were on the edge of that cliff, facing the catastrophic loss of their home to the taxman. It was around that time, in the late 1970s, when things had gotten so bad that home owners were urgently looking around for some sort of solution to all this instability and fear that was basically ruining their lives… when a knight in shining armor appeared… and all he needed to fit the mold of hero was the white horse. This man breezed past the taxman, refusing to be intimidated, as he gathered support for a solution to this disastrous situation – and assembled over one and a half million signatures on a petition.

That knight in shining armor was Howard Jarvis who, with his Taxpayer’s Association, helped generate literally hundreds of thousands of signatures, and qualified for a statewide initiative that would finally end “excessive taxation” and would finally provide an initiative to create security and predictability for California home owners. And that initiative was called California Proposition 13, which remains vastly popular across the state, to this day.

Interestingly enough, Prop 13 has also spawned the wildly popular home & land transfer initiative Proposition 58, making parent to child transfer of property more affordable by avoiding  property tax reassessment; i.e., parent to child exclusion; with respect to  property tax transfer – allowing adult children/beneficiaries to transfer parents property taxes.  In other words, to keep parents property taxes when inheriting property taxes associated with home or land transfer, often as an inheritance.

All which has, in turn, spawned an extremely successful yet small niche trust loan services industry in California, furnishing loans to trusts, specifically loans to irrevocable trusts… spearheaded by trust loan industry leader Commercial Loan Corporation, a trust lender of wide renowned in both southern and northern California. The point being, that the Proposition 59 & Prop 13 initiatives, as well as trust loan services, have all revolutionized residential and commercial real estate in California, and residents will fight hard to maintain that status quo. Because  Prop 13 & Prop 58 are critical to Californians.  Now that they have it, they won’t want to live without it.

It is just unfortunate that the rest of America can’t also enjoy the tax relief benefits stemming from these property tax initiatives  and, ultimately, from California Proposition 13 itself.

 

 

How Has California Proposition 13 Evolved Over the Years?

Before 1978, rising California property taxes were escalating out of control. Since 1978, Proposition 13 dramatically lessened the accelerating anxiety that was negatively affecting middle class California home owners, who were, at that time, constantly worrying that their property taxes were going to continue going up.  Now, children keep parents property taxes in CA… and anxiety over property taxes has abated considerably. Prop 13 has evolved over the years, and has continued to provide positive tax relief for California home owners; industrial properties, and companies…

Click Here: to see how this is reflected in a recent PPIC.org survey (co-managed by Associate Survey Director) mirroring likely voters and/or real property owners in California.

To everyone’s relief, things changed when California Proposition 13 began protecting property owners and city or town local governments right away from financial insecurity largely caused by unpredictable property tax increases; as well as unexpected economic boom-bubbles and bursting bubbles within the real estate market.

That type of unpredictable financial stress hurt a lot of people in California; and often forced families to leave the beloved home they had grown up in… Unpredictable, rising property taxes caused a great deal of growing anxiety and fear among many middle class home owners, both young and old – often causing parents and grown children to reside far apart, against their wishes; frequently forcing families to downsize, or move to less desirable area; often doubling or even tripling the commute time to work. These issues do add up, and frequently affect quality of life.

From 1978 forward… as Proposition 13 took hold, this fear and disruption abated and decreased to a large degree… and California became a much happier, more secure state for home owners to live and raise families in.

Proposition 13 also put in place a much more reliable property tax revenue system that has grown roughly 7% per year since Proposition 13 has been in effect, and economists estimate revenue from property taxes will soon grow to a record high $74 billion.

All in all, Proposition 13 began and has remained a win-win proposition for Californians, along with Proposition 58 in 1986… strengthening family bonding and overall net worth, and providing an enormous blanket of peace of mind for home owners of all stripes, cultures, ages and incomes…. as well as those looking to become happy home owners.  Click here for more discussion on these positive affects, from both Proposition 58 and Prop 13.

Moreover, the ability to avoid property tax reassessment also works in concert with the need many home owners have for immediate funds from a trust loan, bearing in mind the ability for trust lenders to extend loans to irrevocable trusts, regardless of beneficiaries’ income status,  credit score or income.  Especially for new home owners, it’s critical to be able to keep parents’ property taxes, when inheriting property taxes that might otherwise be unmanageable.

Avoiding property tax reassessment is invaluable within the unique process of keeping real property “in the family”, by enabling real estate, home & land transfers, from parent to child  or child to parent – without present day tax value reassessment.

And now, although children keep parents property taxes in CA. and this tax relief goes unquestioned by home owners, California Proposition 193 has expanded this tax relief even further, allowing grandchildren to be excluded from reassessment when real property is transferred from grandparents to grandchildren. This shores up the close-family circle nicely.